Goods & Services Tax - mpco.in1).pdf · GST in India / Germany issue India Germany Differences...
Transcript of Goods & Services Tax - mpco.in1).pdf · GST in India / Germany issue India Germany Differences...
Goods & Services Tax The main differences to Germany´s system - and the need to communicate differences
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Communication- case
The new German CEO Mr. Max Müller in India…
… is dreaming of a nice German Car and looking for a nice new office building, he wants to build in Noida. His company is working in the service industry and for their services 18 % GSt are due.
Car: 50 Lakh + GST 28% + 15 % Cess Construction of Office Building: 10 Crore + 18% GSt (own land)
What are the „prices“ for the supply of this good and the services in his mind?
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Main differences
material tax law
Refund procedure
Assessment Tax Compliance and process description
GST in India / Germany
issue India Germany Differences
Tariff 5%, 12%, 18%, 28% 7%, 19% No Cess in Germany
Option - 10 years For big investment in
agriculture, renting out of office space, clinics…
Tax credit Limited and Silos unlimited Silos for credits need to be
explained
Reverse Charge yes yes clear
Tax Return monthly, annually monthly or quarterly,
annually
Invoice level credit procedure in India
demanding
Reciprocity for foreign credit no yes Credit in Germany not only
for EU states
Procedural law part of material law
yes No, separate law (AO) Every tax law in India has
own procedural rules
Interstate (EU) supply yes yes
IT traceable supply with tax authorities
(Here systems are comparable)
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GST in Europe I
Member State Country Code Normal Tariff Reduced Tariff Low Tariff Middle Tariff
Österreich AT 20 10 / 13 - 13
Belgien BE 21 6 / 12 - 12
Bulgarien BG 20 9 - -
Zypern CY 19 5 / 9 - -
Tschechische Rep. CZ 21 10 / 15 - -
Deutschland DE 19 7 - -
Dänemark DK 25 - - -
Estland EE 20 9 - -
Griechenland EL 24 6 / 13 - -
Spanien ES 21 10 4 -
Finnland FI 24 10 / 14 - -
Frankreich FR 20 5,5 / 10 2,1 -
Kroatien HR 25 5 / 13 - -
Ungarn HU 27 5 / 18 - -
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GST in Europe II
Member State Country Code Normal Tariff Reduced Tariff Low Tariff Middle Tariff
Irland IE 23 9 / 13,5 4,8 13,5
Italien IT 22 5 / 10 4 -
Litauen LT 21 5 / 9 - -
Luxemburg LU 17 8 3 14
Lettland LV 21 12 - -
Malta MT 18 5 / 7 - -
Niederlande NL 21 6 - -
Polen PL 23 5 / 8 - -
Portugal PT 23 6 / 13 - 13
Rumänien RO 19 5 / 9 - -
Schweden SE 25 6 / 12 - -
Slowenien SI 22 9,5 - -
Slowakei SK 20 10 - -
Vereinigtes
Königreich
UK 20 5 - -
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Refund in Germany
• Account data and all characteristics of a company
are known to the tax department
• Monthly self assessed return
• Taxes have to be paid immediately, with return filing
• Refund comes immediately generally within a month
• Huge refunds induce regularly „special tax assessment“
• Problem of so called „missing trader“ in scrap industry and
small high value products like mobiles.
• No adjustment between supplier and customer needed
• Sole exemption: INTER EU TRANSACTIONS
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Assessment in Germany
• Assessing officer generally not specialized in GST
• Recycling business, Financial Institutes, Real Estate and Export main focus sectors
But in Special GST assessments:
• Special GST tax assessment led to surplus in taxes of EUR 1.72
billion in 2016. The results from regular tax assessment or from
tax investigation are not included in this result.
• In 2016 85,681 special GST tax assessments were carried
out. The annual average was 1,873 GST tax assessing officers.
• Each auditor conducted an average of 46 special audits. This
means an annualy average surplus of 0.92 million EUR for
each auditor employed.
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Comparison Assessment India
and Germany
India Germany
Income Tax GST income-, GST-, tax municipality tax
Corporate or Individual Tax Return
TDS Returns Transfer Pricing Goods and Services Tax one long assessment for all taxes and 3-5 years´returns
Notice Yes Yes Yes Yes Yes
Authority Assessing Officer Assessing Officer Transfer Pricing Officer Proper Officer Assessing Officers (several)
Place of Audit Tax Office Tax Office Tax Office Tax Office, but for scrutiny premises for audit in the taxpayer´s premises
Name of Audit Assessment Order Assessment Order Transfer Pricing Order scrutiny , audit Assessment
Initiation/ Beginning Within six months from the end of year in which return
filed
7 years from the end of financial year
Reference given to TPO once the case is selected for
assessment
notice (3 months prior to completion of audit)
within 4 years after ending of year in which tax return is filed, the assessment has to start
Completion 33 months from the end
of tax return´s financial year (exeption TP)
7 years from the end of financial year
45 months from the end of the tax return financial year
within 5 Years from due date of furnishing annual return
generally no time limit, with exceptions
Result Tax return may be accepted
or enhanced Interest on late payment of
TDS ALP of transactions may be
accepted or enhanced assessment order or audit order Assessment Report and changed Tax Returns
Penalty/ Prosecution Risk Yes Yes Yes yes Yes
Whether appealable Yes Yes Yes Yes only Tax Return is appealable
Time Limit of payment 30 days from the date of
receipt of tax demand 30 days from the date of
receipt of tax demand TP Order becomes part of
assessment order within three month of service (receipt) of an order one month after receiving changed tax return
Reopening limitation 7 years back
17 years back in cases of foreign income
None
7 years back 17 years in cases of foreign
income
not mentioned in law, but 72 month after filing annual return
the data records have to be kept very clear rules: 10 years back
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Tax Compliances
• Big shift in Germany
• Tax Compliance Management System needed, as rules for correcting of tax returns were changed in Germany
• Also Tax Compliance in India becomes part of Compliance Management System in Germany.
• Especially applicable for listed companies and strong impact on family run businesses
• Risk Reporting- regarding GST very demanding now
• Creating an appropriate System versus outsourcing
• Thoughts of TMCS mainly influenced by US
• Procedure description and documentation very important
• Controlling, internal audit, and regular adjustments have to be shown in case of „correction“
धन्यवाद !
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Saskia Bonenberger
Mohinder Puri & Co.
1 F Vandhna, 11 Tolstoy Marg
New Delhi 110001
India
T: +91 (0) 11 4710 3388
F: +91 (0) 11 2331 3908
Mobile Indien: +91 88 0094 7373
Mobile Germany: +49 170 92077585
Email: [email protected]